Cirrus Logic (CRUS) 3 Aug 232024 Q1 Earnings call transcript

Ladies and gentlemen, thank you for standing by. Welcome to the Cirrus Logic First Quarter Fiscal Year 2024 Financial Results Q&A session. [Operator Instructions] As a reminder, this conference call is being recorded for replay purposes.

I would now like to turn the conference call over to Ms. Chelsea Heffernan, Vice President of Investor Relations. Ms. begin. may you Heffernan,

good and afternoon. you, Thank

Eastern today's Joining analysts first Logic's press feature Today, Relations quarter John session our p.m. Cirrus fiscal year is Executive me our The at available results Officer; the are covering earnings X:XX Officer. results, on Chief Financial and Forsyth, Chief announced call Venk at shareholder questions website. webcast for the the we Time, XXXX. approximately financial financial our and letter Investor This all will call of from discussing Company's the release this company. Q&A Nathamuni,

results GAAP measures discuss Relations on that measures our earnings are the their are these this financial items. guidance certain to non-GAAP of included available Investor Reconciliations in include Additionally, Company's we and on the exclude non-GAAP website. release and comparable call all directly will measures will most

other uncertainties statements any results to or additional refer Commission of other could cause differ the filings Logic Exchange Please as Please subject whether providing available update risk to on XX-K registered release note statements, results website Form and shareholder and the projections of projections. disclaims current from the make with that this and Securities any for and the corporate materially issued revise or otherwise. result and expectations. to may forward-looking factors or to well actual as as may Cirrus By today, press the letter during which information, are discussion the from new that session, Company are latest that differ a we materially that expressly cause obligation developments forward-looking this risks projections to actual

the John. to like I'd call to turn Now, over

thank you, call. for you, Thank today's and joining Chelsea, everyone,

of how in year you've results Cirrus end that we delivered in and outlined discuss that, the towards will to smartphones. on quarter, products, Logic Venk to of XXXX, fiscal like moment, first greater doing release, the I'd of the on press $XXX top guidance get driven on the before strategy by our detail. for shipping a million In As we're color revenue against in But calls. some previous quarter I've the seen provide the

that pillar in build And quarter, customer strategy and we and increased that we our deliver that of out anticipate custom will a significantly to value to ship leadership end, performance first to smartphone next boosted component we is maintain taped calendar audio. our will next-generation believe The and amplifier, this which our year.

introduction product, first performance and also Logic is benefits deliver XX-nanometer We also which our transition technology new on to feature meaningful customer. codec we'll again, a smart a track This product validation new Cirrus completed codec, for end of represents for next significant our and year.

sockets. seeing we general haptics launched a anticipate And we great Android several market Cirrus consequence, in our smartphone smartphone in next-generation many market secured In coming audio year. products and being the the featuring also business, as Logic,

product cameras we since are we in to smartphone Moving of of camera We're excited high-performance made this mixed The feature grow first major in content to every in controller progress on our signal we're our see that we've launch. a the pillar strategy, about opportunities area the introduced continue smartphones. the second calendar marquee of XXXX. our to proud

that investing are looking still there's be pursuit for ramping camera and And is a forward, goal. production believe we value we in grow map of significant road smartphone to product controller a area, features to our today year. introduced later further in latest this to continue potential this products in currently We're that of of and expected

programs power power indicated today, represent R&D Company. underway we the have number we believe And previously Beyond and future. side drive the a technologies We in advanced camera, system in the battery of investments delivery. for diversification battery-related growth continue this product will that charging, to revenue great related are management the space that and believe also to we've opportunities and making today we high-efficiency

we're high-performance additional leveraging applications increasingly mixed the on our we the in strategic to diversify Turning opportunity are Most greenfield into and years. expanding the to audio laptop strengths signal third and we in significant recently, coming into see Company market, our where vector, focused markets. for

we with relationships significant are of Today, five top them. laptop each majority account volumes, a we shipping have together the for with unit of who content laptop all OEMs well-established and

amplifier and stages we're for we in components entry incorporating been codec our While we come next end to significant around optimized expect products to into our market and that still early have XX in and devices market, these engagement demand of the specifically the see customer months. new this already laptops,

quarter, the with also this shipping business of key first During June segment, growing new our highlighting we and laptop secured anticipate amplifier, win year. audio our importance in quality device begin this will next the we

amplifiers new of components the have been of design time adoption our both selected wire our reference as part that will compatible Intel, sound more which OEM platforms. market from delighted codec enable we're and and across accelerate Additionally, to

to applications. include Beyond further market virtual laptop reality, anticipate in term. long revenue engagements invest professional augmented we our the the industrial expand will market, and gaming, diversity customer that audio and automotive, These and we in products both also continue in

of our about industry-leading illustrated excited a outstanding engineering We're range our launch of ADC number professional which property latter beyond. best-in-class the products. talent in audio areas these and intellectual by we The believe we of grow leverage to business can ways our and recent in

taken in our overall revised revenue global in a base. Finally, to of briefly reduction This I employee our action decision align better X% in discuss structure cost approximately July, our we was order of to with would like expectations. workforce took the resulting difficult

that well change invest regarding following believe opportunities been and expecting market light the we we to In We disciplined this a softness. to see of our remain the action, in in many to and to this product fall are current of previously discussed growth. we both drive that have be HPMS future plans execution committed strategy introduced customer general positioned

QX financial overview And quarter. now our the results provide for Venk turn well second our let with that, guidance over me XXXX the fiscal as to call as for of to an

you, from as first a unit into and, QX. first afternoon, summary end top market our Good range I'll components due volumes volume XX% to revenue provide which fiscal were the fiscal year XX% sales. extent, down then a shipping weakness guidance ago quarter general smartphone lower Fiscal quarter-over-quarter end with of down higher continued of guidance lesser than Revenue to was in the expected. and for results to quarter a Thank market the was John. start everyone. close and $XXX was million, of

points of margin. non-GAAP gross guidance have was gross Non-GAAP to was $XXX.X reserves is above a the the year-over-year declined profit while higher XX.X%, by XXX Turning favorable basis quarter a On provided. in the basis, to sequential alluded high-performance to that we due inventory to gross gross midpoint John million, slightly mixed-signal like gross margin product less update and margin basis, I'd an product on margin slightly, earlier. range the mix. on and a increased provide which

made internal with foundry the removed do shareholder disposition letter, during mentioned and we quarter, and this customer of good on wafers in we progress But from revenue associated with new not the model. I'd anticipate both have as with this as our the relationship partner we associated component our the our our we product, a like the also range pursue to components reiterate strong as a products. remains have opportunities continue on and to existing material impact. that customer well of next disposition programs financial for of both we technologies the and to collaborate As generation

the in in development note were prioritization the to Non-GAAP below guidance OpEx. $XXX.X that expenses as sequentially. to GAAP discretionary the expenses $X with guidance. range expense the are operating low material million, million referred spending. came associated and expected product be down well John are quarter our on as of controls QX Turning end not 'XX due fiscal actions operating to cost operating in I'd to costs earlier Restructuring reflected

of technologies invest revenue the as was $XX growth. we're per opportunities quarter drive through P&L, And operating in operating flowed line. $XX.X expense that the quarter first in note $X.XX order overall, to revenue was non-GAAP income in continuing products pursue first XX.X% and to the million higher-than-expected And our in lower or long-term or bottom I'd share income on the revenue. the non-GAAP lastly, and to the net million, to

the sheet. turn balance to me now Let

continues balance million and $XXX Our to sheet we first cash in quarter remain ended equivalents. with 'XX the strong, of cash approximately and fiscal

inventory was million also ending the to support down as Our cash the to half the launches the year and quarter. built of we product second during seasonal stock repurchase used in balance prior cash calendar quarter from $XX.X

XX% about Specifically, in quarter, operations $XX.X June is used the million cash during of revenue. was which

undrawn million have to we and continue on revolver. outstanding, $XXX no debt our have also, We

turning to inventory. Now

fulfill to launches As half the long-term indicated with for wafer building GlobalFoundries. in the we've capacity we year, our quarters, product been prior inventory and purchase agreement seasonal our second commitments in of support calendar

As and a million, QX, days XX up days up was from of $XXX.X was sequentially, result, sequentially. in days million $XXX inventory approximately XXX inventory

agreement. add Let on our me some color additional GlobalFoundries

of associated wafer HPMS was product agreement allows capacity within a intended allocation originally portfolio. the our While for flexibility new agreement the portion this component, to with our support

products drivers As power high-voltage reallocated XX-nanometer these the and technology, haptic wafers and a that result, battery including to use other amplifiers, are underlying being process same ICs.

prior quarter. expect we QX from in inventory 'XX, increase fiscal ahead, Looking to the dollars

product are ramps. of days expected However, decline seasonal due to inventory to

While inventory point of the this be of levels increased year, for inventory fiscal the we to the year. fiscal anticipate we QX high of during products expect other these remainder

CapEx $XX.X flow million, minus $XX.X quarter to in now used million cash operations of Turning flow. XX%. and free roughly June was resulting was in for the the in quarter, Cash cash

the roughly For XX%. June was the XX-month period margin cash in free quarter, flow ending

utilized price buyback common $XX.X an stock $XX.XX. to QX, share at our of approximately On front, the of we average repurchase shares in XXX,XXX million

remaining As of we repurchase share of in 'XX, the fiscal million our $XXX.X end had authorization. QX

to to of expect repurchases, the for we in the on will form expect revenue long-term to million guidance, in fiscal continue we $XXX a million. range return We 'XX, which benefit provide capital forward. QX the to stock shareholders going now And $XXX believe of of to

range margin Non-GAAP product gross partially up compensation is $XXX higher XX% expect of the $XXX to million as expense. be variable costs offset is expense lower range and to in development operating million employee XX%. by expected to sequentially We from to

long-term but growth. We will development drive to product strategically continue control spending discretionary to in invest

XXXX lower front, discussed, fiscal expected, by the expense, will as be our as capitalized rate unfavorably be On continue we will credits foreign effective tax our year. to tax and tax this impacted R&D non-GAAP previously

rate XXXX fiscal prior be XX% guidance. tax non-GAAP Our is our with to quarter's approximately XX%, consistent to expected

if as of closely We're passed. purposes. restore R&D monitoring of continue to investments time immediate We that would capitalist deduction anticipate less recently become for expenses legislation the R&D unfavorable that tax amortized will for years additional impact over tax are R&D introduced

had we solid closing, as to these deliver executed fiscal 'XX In well results. a QX we

forward, term. over best on to grow will and both continue the the Company focus enable we long Going to the opportunities profitability to revenue

And we discuss is include to that specifics Q&A, quarter. interest like fiscal while to year note And company fiscal with XX policy our fiscal about the there we XXXX understand business largest begin will customer, is the weeks Logic's Cirrus finally, in and I'd in a we year third not relationship. before related our XX-week intense accordance will

With the Chelsea call the that, now me let Q&A start turn to to session.

Venk. Thanks,

we're start Q&A the ready earnings the Operator, call. Instructions] We will to questions. portion take [Operator now of

from the first Matt Cowen. with [Operator Ramsay of comes TD question Your Instructions] line

Your line is open. now

HPMS around I a customer. for the questions you of that guys, to guess didn't product I ask ramp both the with large of a wanted resolution of John, couple

of So about resolution that things, which one different a wafers couple you built. the were sort of the of guys is talked on

at are little on all? more about? If a color included able you talked you still And inventory guess in those bit to if your that, I that give could wafers you're balance

years And was conversations that to really workforce question of it John, And yourself your predecessor with And hard a know decision the mixed-signal analog value the fault at then kind this just given with longer-term folks. the engineering Jason, of it's all, and thing scarcity always is, that topic with not take find the talent, I own product. is one. engineers. really, I second been on rather over audio the with rough But just that than reduction kind your those of a that happened maybe to reallocating go, wondered that of

maybe bit so little could talk that? And a about you

there, is in I'll speak and that talk and the then been the we've over product. through significant expectations reality, Venk, all, all that we us of there we with to in decision position revenue that progress still he can But we of first Thank forward you, wanted long mid- into dispositioning a whilst to the were how we invest reality a Matt. a obviously, and working work about the immediate around term. to more the took as hand to the was cost hard to to that bring there's in ensuring change a near-term lightly not believe drive all. work Yes. line at to that very things structure the Yes, company will in

And the the And of point is to across latter have of growth. strategy. I'd do that opportunity continue emphasize very we pillars in our invest three areas many to because those plan

although in with in ago. had more this fact, business, action than was people the kind So design distributed will, across working exit quarter of a this we we year

help opportunities the had to we the steps medium and -- while ensuring grow same this So diversify that to long the are navigate some term. at believe we for time, we're take us going is in on challenges, positioned to and short-term that execution the

This Yes. the Venk. And thanks, Matt, question. is for

to that's wanted related question I part to expected no about the the address inventory ship. longer So, to your

So clearly, mention at to that as want well the the we our high current make levels, good And The as really both in progress prepared the with this into want I is guidance. on first remarks. that basically, the foundry mentioned different our inventories not I made customer material our factored partner point impact, expect is level, do in as to we've disposition. financial I a

material across how in talked do GlobalFoundries that Now terms as capacity one the thing about we mind we the some we allocate have suffice that to And it keep the flexibility to for our in the is of have contract, we we say impact there's that the that inventory have to going no no into guidance, factored and that's financial products. of different component longer ship.

comes line the of question with next Your Stifel. Tore Svanberg from

You may now go ahead.

just on If last could that Venk. up topic, I follow

issues I of inventory, just So the XXX. would mean the that know I go number been the but with lot things your what perhaps HPMS inventory have product that a were there's into days without roughly?

question, for the Thanks Yes. Tore.

a in happens of fulfilling half That's the to couple have such. building the traditional the driven commitment of fact by of it. year. majority also vast And supplier a is launch overall key of about lot inventory second terms things that wafer our is So of a the our it on ahead are we we of products and in we that foundry obviously, starts of the talked the customers' that

what before, days our associated it's I we discussions whatever the quarter a without So going can account tell as And said number. foundry as with we're down that taken have well come inventory small with And the is, as supplier. into particular that of the split is with we product. relatively clearly, you do specifics in both expect our to I into next our inventory and customers

us products, John, -- John. can't second you for don't it's about mainly just camera for you And and it helpful. very year? second half, can or the you I think That's now give XXXX? and your sounds for I preannounce customers' I should know mean, products. on right some but obviously, possible takes But new how controller mean, we opportunities next growth content half puts like

Tore. sure, Yes,

into this the going content growth in I've controller the previously yes, that camera cycle alluded So is to area. the fall,

we a have product So then. new ramping

both As to of to deliver we the codec, boosted in the the two got believe calendar coming meaningfully new which XXXX, market our year, amplifier more turn and next significant in we've audio we value components, to products customer.

potential track those, excited very those we're with and So on about and their impact.

power camera there's around expand grow still in where further beyond areas, in space, alluded to and look grow. particular, to the we other believe in but us I've are for battery opportunities areas to to multiple believe we opportunity we there continue also As that, the HPMS

from Your Susquehanna. Christopher next question from of comes line Rolland the

Your line is open. now

first my revenue to also, a guess I had you question some nice guys mention And upside in as guide units. due is, well. guys you did better

an high think the when anything about out something part September us supply look typical and does shipment example, for As September, guys these we cycle also commitments. there? a we well? of guys tell know versus high DOIs that Do should DOIs that beyond about you you and make and is out HPMS build-aheads, you there but also adjustment guide, these beyond And even don't in -- for pull-in wafer have terms as I

look hand and provide pretty a stable. would here that the I to Venk today we that add don't make when I'll quarter, the Chris, additional of and guide comment bit and if to color over there, additional he beyond robust backlog wants. I then obviously, is it's the we color at movement -- the

that the of you're of haven't alluding kind stuff a signs We seen of any lot really to.

as pretty it's steady So this goes.

or reiterate as the throughout no at look we we've the in cancellations to nothing rest quarter, seen only we said, but doesn't And But the unusual, seen of quarter reason far, also customer, -- one. business one Yes. so and give the have at we've order time. believe -- with guiding we're us has bookings so anything pushouts obviously, Obviously, what top what pull-ins the terms And of I'll a are our business, there's John and forth. number parts that unusual. there any changes

hand in Again, second we asked And of were relates prior the inventory. for to years, And question, much the obviously, inventory. I days pretty want low. incredibly reiterate the couple the about as of then it that point Chris to march to in were terms existence a

this it the we what of in more decline we down that quarter, we reiterate also service quarters about for that the path expect couple that's been next are customers promptly. that up inventory inventory point the quarter. building while talking to so And can days of we executing. So, have our the last are do the And

$XXX million $XXX commitments. DOIs, or on not? you flexibility to here the wafer secondly, the does those feeling million come? come 'XX high into And in 'XX guys less because your and in are you'll have How yet about probably of then And play that

question. Good Yes.

the we clearly, we are with commitment the supplier. standpoint, about long-term from where So feel good

are out we those parts and We with we how trying working repurpose for of of figure demand terms in forward. the collaboratively do to make use going see them that them very ones

longer last in and to ahead other a on. content this supply the years working continue being work increased next the time obviously do of of several then look for to capabilities we're runway terms lot still of sources we of over over that term, terms opportunity the in the the supplier with and we And see see because -- new over able

[Operator Instructions] The next question Capital. from comes from Baruah Ananda line of the Loop

may go now You ahead.

ARR, Yes, two philosophically that begin of opportunity, quick and robust Is to with advanced with if could. -- robust And have to features smartphones guys ones, capability of Guys features if work as sort advanced need DRR, quick in, you both power were to adopt I kind to more go-forward and just regards and that if talked battery for that about, a even smartphone And DRR noticeable the I the capabilities. years. provide? just value functionality? coming smartphones regards follow-up. AI a in in step-up power and to ARR, you then their Would were a way more create

domain the two is guess in would really specialize between physical world of into us. favorable interesting be an where we question. things a and probably yes, That's the Thanks. interface to the speculative One digital Yes. bearing domain. potentially I'll I be here. that is But kind

boundary problems cross needs to of data space. solving processing to anything ideal a we're some be then at for lot very that power where and So in low that really of kind subject

think like augmented so camera use audio boundary the so -- And on, done well in general, in AI, the the between cases, more That's and boundary look optical traditionally reality drive which why that. we've and certainly space. and I in recently around

I think for presents grab. to us So that opportunity

I And causes thing very, demand that power you space, AI within it asked spikes very then anything since is hungry, major very to about think it related obvious in that's power the any system. one power with is

user already benefits system in where in that's delivers to even control, so across power and lot the power and to a terms of protection, our the system, of is of to on. really battery thing and the exactly And the see kind terms customer I managing it the our end of the system conversion --

we're yes, would of experts really I accentuate So problems some think at kinds of that the that solving. probably

appreciate about of you know context Yes. that That's context. around were given And follow-up talking that sort giving the awesome. specifically guidance. I you're quick just not the I December quarter is

Is stable awful You're say modeling just at to backlog about to talking that's sort start and might purposes? look if what of place our goes. the she not that your be, for looking seasonality also classic steady just an we as

there's I of either when we think so. of course, I'll this of part material caveat that. year, any quarter it boundary, the into on because around lot side get a of

the much move middle doesn't movement straight look that the or fairway. six you we're the seven shape compare of But take amount. relative then is years it's fair it quarter, the down seasonality, it the at needle the now of against So to last last the guiding in if of terms of to quarter and

So again, kind us. normal looks pretty to of it

next line Barclays. question the comes with from Curtis Blayne of Your

open. line is Your now

who can mean to I'm the you I IP of just that guess customer I'm as lot guess, development, of of I on speak mean, assuming I answer you one kind of to be if you product ask to the want why shells, answer, can I to might I a you I a cost. if the what's But it, the speak because any so chip? of to just wondering asked spend Is it this status owns I'm to And curious is use the going can. part. in kind never got it? tough there you, kind need? you they're time that but

maybe it as of like the speak was of efforts product you of to made. some monetizing to product? curious the can the reconciliation So, recouping to think on that and either kind spoke I'm that wafers or getting future anything I later, cost your you

we understand behind that out lay them factors details other happy point we to previous the were decision. going certainly not I milestones, I'm were the of we go as our through obviously, in call, but hit the did there what Yes, involved.

in forward per around expectations Regarding the That's it expectations remarks, to it. mightn't we model, which the don't means comment of any prepared for it the say not taken we've back. that going have out come it,

because cool so in obviously And actual there, that it's love not that plan right customer about imply just we're not, insight that. the the saying -- and technology we we But say line have very it don't has that. to into some would don't also we that to have really plan we're we is it's There the of something sight for of now.

get on to to So, shelf. great yes, would that the lot find there like it But the to a really light day. of remains see there's a way of we IP it

when Great. of workforce was And to of curious and December. just get the of then the December? that for then I I'm Obviously, about kind of of just, extra you in impact OpEx just the the is timing Venk, some full the up reduction, And in the reduction, OpEx on September, wondering week? the of XX think how that? kind you the offset quarter kind of does have mechanics

Yes, the Yes. for Blayne, thanks question.

clearly, but quarter, I guidance for you on point. guidance the a giving we're your So September perspective, understand from

for timing, the only of will actions the took fiscal effect full essentially, to that valid of So X be months in terms year. the X.X obviously the we about of

And to the it. so that's about way think

that reduction. was X-K roughly it the X% we X% announced to in And

out months, X% the if will So the I spread So, to somewhere the right? math, X% the about it out work around just to it. to that's think next way think do several you over

In the side, will impact have benefit on you revenue the should on week way as But and the OpEx, the an terms you're going the clearly, it any in extra see on of quarter, OpEx December that's definitely side. to not well. model

question the comes Matt next TD line of Cowen. with from Ramsay Your

open. now is line Your

the about Thanks reference increased John, talked you But might covered about how I those been expand laptop that you've could back some be is of wanted -- commentary understanding you little size immediate to and under might relationship, bit. there. translate in The revenue of your on tonight design the customer at me a that market Maybe programs that status the your and just a big with for that programs jump opportunity into customer? player of large let design reference getting in. Intel. that unit having

Yes. on couple of talk you, Thank PC the in a about guess axis. I'll opportunity Matt. I --

expectations So looks. the formal of going our content to of And our believe SAM about potential one and we and is revenue how our I'll relevant market of part penetration is timing then that stack of just be there. talk the

in and codec We've announced we're inclusion sampled the design. amplifier innings. customers. just early the just We've So those to the reference the of on

Typically, will the OEMs to made see in between you available months XX be those reference before designs products market. and end XX

designs underway which reference a designs, pretty significant So, where of number to today, still to we've have also that predate way got some go that number design. for grow we significantly, but of

to become the in 'XX than and will FY is continuing somewhat meaningful So devices FY going to but it I then us, products FY grow 'XX be way coming total see to fairly in that 'XX more about we think from growing the those include some late and new that limited revenue through out 'XX and and is more beyond. think

see going products. And HPMS the be SAM of that we up audio is to made and

we So we have designs, obviously. at if stack underway where and see least a can driver, at which amplifiers one are multiple of meaningful starts haptics which become underway design pretty a you content, code look to today,

power top worth we -- of layered multiple we time, to also be products from of for over us products then we content. power And that. And can can see see expect on dollars potential some in

when HPMS you if power-related billion look of $X.X out you products the audio account. there's the SAM products XXXX, into about So to think take we both and

be This our last will question.

the of next from Svanberg Stifel. comes line question Your Tore from

now Your line open. is

and topic I third I strategy. a Will mean, used? to your notebook that would just percentage wondering just to progress like we obviously, it want you out to break this of start would you like there Because had mean XX% number, track because us. revenue? that of part obviously last with And I something some as much a of be if that follow-up share so, is if numerically how is your

question. great Tore, Yes,

as such. So everybody in that times. mentioned, of going multiple is see amplifiers the about market dimensions just tough PC codecs through market excited some and we're and short-term Clearly, that the knows we a us, PC perspective, across opportunity John front in pretty the from and especially

space. So over expect And at yes, do will appropriate revenue meaningful that. the we time, translate wins design into these watch time, the to we consider and

turn we John will will that, the for Q&A to With back call end final the now and session, remarks. I

Chelsea. Thanks,

in progress delivered the revenue for end Cirrus top core guidance our across summary, focus. first towards strategic and great Logic made our quarter of areas So the of

of which leadership content into is and our and leveraging outstanding mixed maintaining in our high-performance first continuing signal to high-performance new in diversify smartphone mixed audio thirdly, to smartphones; expertise signal secondly, The our expand markets. audio;

like We're thank excited commitment. our we about your continued Logic. and us, you all and the opportunities in interest dedication front incredible thank also to for in I'd of Cirrus for of their employees

the in I'd the that be Please details. investor participating conference the you check our in Vail will Thank also we all we for Before on KeyBanc to today. joining X. call close, note August for like website

all concludes call. and Ladies joining. for that you gentlemen, Thank today's

You may now disconnect.